Introduction
The podcast Biden’s Student Loan Dilemma by Michael Barbaro and Stacy Cowley examines the state of student debt loans in the U.S. According to Cowley; debt deferral has been the primary strategy used by the U.S. to provide relief for borrowers for the past two years (The New York Times). However, it has led to several unintended consequences, including economic. Thus, Crowley argues that the Biden administration is left with two options to choose from, comprising to cancel student loans entirely or force them to resume the repayment process (The New York Times). The primary obstacles to choosing one of these options are political, economic, and logistical.
Obstacles to Cancelling Student Loans
Deliberations regarding the cancellation of government student loan debt are currently underway, and there are few signs that a compromise is imminent. Meanwhile, rising education fees have made it difficult for learners and employees to settle debts via intricate government waiver schemes and employer-based loan payback systems. It is reasonable that some individuals who have previously repaid their college loans may feel disgruntled that they lost their opportunity to become debt-free. Indeed, such individuals would argue that students have a civic duty to repay their college loans. This is a logical argument given the claim by Crowley that the government is spending 5 billion dollars every month to maintain the deferral scheme.
Attempts to eliminate student loan debt garner much media attention, yet public opinion remains divided. The point of contention often revolves around who should be eligible and whether or not the national government should interfere. About six in ten Americans (67 percent) are in favor of some kind of student loan amnesty, with 24 percent opposing complete debt forgiveness (Aborn and Sean). A greater percentage of Americans (41%) favor debt rescission that helps all borrowers rather than just those with low incomes when exploring several possibilities for debt forgiveness (27%) (Aborn and Sean). This way, it can be argued that public opinion significantly influences the course of policy on forgiving college debt. It also explains why the Biden administration cannot develop an effective solution on the matter.
Tertiary education in the U.S. has traditionally been based on an implied social contract that is at the center of the country’s moral framework. Americans have always been committed to self-enhancement and socioeconomic progression throughout the country, with opportunity fairness as the widely acknowledged foundation for accomplishing these goals. This is evident from the podcast, which states that at least 45 million individuals have borrowed loans to pursue higher education (The New York Times). Even while higher education has a foremost pledge to the American dream of making social and economic transformation a feasible ambition for most Americans, the expensive cost of tuition has hampered its capacity to achieve this objective.
College loans are crucial because they help millions of individuals from low-income families pay for their tuition. All students are affected by ballooning education costs and state budget limitations, but Black kids are disproportionately affected. Consequently, while Brown v. Board of Education helped remove racial segregation in schools, equal access to education remains an American pipe dream. Many of these students cannot repay their loans and are hopeful that they will be forgiven. However, the President cannot legally pardon student debts by executive order. In other words, due to constitutional checks and balances of power, Congress alone can approve legislation granting extensive student debt cancellation. This explains why President Biden’s only strategy has been signing debt deferral executive orders, but he could consider declaring an affirmative action policy. However, many states have banned race-based affirmative action (Stanford University). For example, affirmative action could allow partial college debt forgiveness for students from impoverished Black households.
According to the podcast, most student loans are provided by the federal government. However, tertiary students had diverse reactions to the recently released federal budget. Although student organizations are pleased with a few of the larger budget components linked to the affordability of living, including accommodation and dental services, they are dissatisfied with the absence of metrics connected to the cost of higher education, job entrance, and psychological well-being (Yun). Student organizations note that Budget 2022 has no pledges to completely remove student debt interest or boost the highest income level for the Repayment Assistance Plan, as promised by the Biden administration during the last federal election campaign (Yun). In short, the latest budget had no broad initiatives for higher education students.
President Biden may adopt a number of strateÂgies to reduce curÂrent and prospective student loan debt. Biden ought to make it his mission to persuade the states to lower the cost of pursuing higher education. This should include broadening the availability of low-cost and free degree programs and increasing the amount of financial aid made available to minority students and those who have children or come from low-income families. It is also time for him to speak out in favor of policing college debt servicers and extending debt pardons to individuals who have not finished their programs and want to re-apply. The President may also urge states to reduce current college debt weight via state tax incentives for students, state-sponsored repayment schemes, and loan amnesty initiatives for individuals who choose particular professions, such as education and health care.
A key issue widely debated regarding the student loan burden is the interest rates. According to the podcast host, interest rates on loans were paused in the past two years due to the debt deferral program. Interest on college loans is not a way for the national government to earn a fortune from the debts. This is done to balance the expenses associated with granting loans, such as inflation, since extending credit is risky. A few borrowers may fail on their repayments, resulting in lost income for the federal government; thus, the state lowers. its probability of losing funds by collecting interest. Students who take out a government college loan incur the same rate of interest, regardless they are earning basic income or have inherited fortunes. Undergraduates have a rate of 3.73 percent, while graduate students have a rate of 5.28 percent (Armesto). Making nil interest official or reducing interest on current debt might assist debtors in eliminating their loans without increasing the principal balance.
Expanding the usage of income-driven repayment (IDR) is likewise a viable option that President Biden should consider. Currently, the United States has a gradual student-loan cancellation scheme that is often overlooked in policy debates. IDR programs support cash-strapped borrowers who have experienced unfavorable life situations or have low-paying jobs. Even though there have been issues with the execution of IDR schemes in the United States, subsequent legislation has made it possible to rectify them.
Overall, the podcast is educative on the student debt crisis. Unfortunately, it fails to mention the essence of the problem, which is crucial to understanding the current standoff. Most student debtors become higher-earning individuals who have little trouble refunding their debts. In most situations in the United States, a college degree is a gateway to prosperity and a high-income career. Many people who are having difficulty repaying their college debt go to limited schools, the majority of which are for-profit universities. The disparity of motivations between students, institutions, and the state is at the heart of the student-loan crisis. Federal loans used to finance higher education are to blame for this imbalance. If students cannot repay their debts because of their bad employment situations, schools are not responsible for the debt. In reality, taxpayers are the ones who foot the bill.
Conclusion
To conclude, partisan politics plays a crucial role in shaping the direction of the debate on forgiving student loans. Supporters of student debt relief believe that letting repayments start before the elections could dampen Democratic support participation, particularly given the President’s inability to achieve significant policy initiatives. Enabling payments to restart, many Democrats fear, may have political repercussions for the party as it attempts to preserve its narrow House and Senate majority (Egan). Indeed, this was reflected in the poll by Bipartisan Policy Center, which showed that Republicans are far more inclined (40%) than Democrats (4 percent) to reject the federal government canceling college loans (Aborn and Sean). This means that a lasting solution is unlikely to be found in the near future because the matter is highly politicized.
Works Cited
‌Aborn, Maritte, and Ruddy, Sean. “New Survey Provides Insight into Public’s Concerns about College (Un)Affordability.”Bipartisanpolicy.org, 2021.
Armesto, Jason. “Could 0% Interest Rates Settle the Student Loan Debate?”Fortune, 2021.
Egan, Lauren. “White House Confronts Political Pressure to Extend Pause in Student Loan Payments ahead of Midterms.”NBC News, 2022.
Stanford University. “Borrowing While Black: Understanding What Makes Student Debt a Crisis for Black Students.” Stanford.edu, 2020. Web.
The New York Times. “Biden’s Student Loan Dilemma.”The New York Times, 2022.
Yun, Tom. “‘Missed Opportunity’: Budget 2022 Gets Lukewarm Reviews from Student Groups.”CTVNews, 2022.